GOOD CREDIT IMPORTANT?
While credit allows you the convenience of buying something now and paying for it later, you pay a premium, known as interest, in order to do this. Just how much interest you will pay is determined largely by your credit score, a number that lenders use to assess your credit worthiness and to determine whether they will give you a loan and at what interest rate.
When you go to a lender and ask for a loan by filling out a loan application, you authorize the lender to pull a copy of your credit report. This report is maintained by three national agencies:
TransUnion, Consumer Disclosure Center, P.O. Box 1000, Chester, PA 19022, www.tuc.com, 1-800-888-4213.
Experian, P.O. Box 2002, Allen, TX 75013, www.experian.com, 1-888-397-3742.
Equifax, P.O. Box 740241, Atlanta, GA 30374, www.equifax.com, 1-800-685-1111.
Thanks to the Fair and Accurate Credit Transaction Act, you can now get a free copy of your credit report every twelve months from all or each of these companies. You can go to www.annualcreditreport.com, call 1/877/322/8228, or request one by mail by writing to Annual Credit Report Request Service, P.O. Box 105281, Altanta, GA 30348-5281. If requesting a credit report by mail, you must include a form with your request. The form is available for download at the Federal Trade Commission's website at www.ftc.gove/credit.
Not everyone has access to your credit report. Businesses that extend you credit and employers can view your credit report with your permission.
Some credit reports will include your credit score, a three-degit number that ranges from 300 to 850 that is based on a calculation of scores. Unfortunately, the free credit report does not automatically include your credit score. However, for a fee, you can request it.
Your credit score is based on the following:
* payment history
* outstanding debt
* how much credit do you have & how long have you had it
* credit mix
* new credit applications
The lower your credit score, the more interest you will pay for credit. The higher your credit score, the better credit risk you are considered and the better rate of interest you will be offered. You can raise your credit score by paying your bills on time every month; paying down your debt; keeping your debts from going into collections; and not applying for too much credit. Improving your credit score takes time and commitment, but it is possible to do it on your own.
If your report reveals that in the past seven years you have been late in making payments on your credit cards, loans you never repaid or a bankruptcy, you may find it difficult to get any more credit. You may be rejected by a potential employer, or you may have trouble renting an apartment or establishing telephone, gas and electric, water or heating accounts.
Negative information on your credit report can affect you for many years. No one can remove accurate information; however, you can ask them to investigate inaccurate information. Enclosed with your credit report will be a form or letter explaining what to do if you find inaccurate information or items you do not agree with. Items over ten years old can be deleted also.
To repair bad credit, it is imperative you make good credit a top priority! Use credit responsibly. Make timely payments and only borrow amounts you can comfortably repay.
*information for this article was taken from "Money In Motion".
A FEW MONEY MANAGEMENT TIPS
Most people go through life living from payday to payday and learning to rob Peter to pay Paul. You're probably not going to make the effort to bring your finances under control just because you have all this extra time and have nothing better to do! You're going to do it because money is too important and; perhaps, you're too tired of never having enough money, the past-due notices, or feeling like the weight of your debt is causing your legs to bow.
1. The first thing to change is your attitude towards budgeting and managing your money. Don't think of budgeting as going without. It's not a diet! In fact, it is just the opposite. It's a way to make your money buy more.
2. Track your spending for one month. Analyse your spending foo-paws. The spending "traps" we all have! Use your new found knowledge to help set up your spending plan. Then, KEEP IT SIMPLE folks! It's not advisable to keep tracking every penny. You tracked, reviewed, and pretty much know where your improvements need to be. Don't beat yourself up!
3. Try to pay your bills once or twice a month. Review where you are on your spending plan. You shouldn't have to spend more than one hour to write your checks out. Don't be a checkbook junkie!
4. Make room in your budget for fun things. Be tough about needless waste; but, don't deny yourself some pleasure.
5. And I believe this one is very important! Don't feel you're a failure if you fall off the wagon. Expect the unexpected. Your budget may not always work out perfectly. Don't give up!
Keep your eye on your net worth as well as your income and outgo. Your net worth is the difference between your assets (what you own) and your liabilities (what you owe).
Consumer Tips for Removing Credit & Money Barriers to Homeownership
For the average American household, using credit is a part of every day life, whether in the form of a mortgage, a car loan or credit cards. Wise use of credit helps make the dream of homeownership a reality. However, unresolved credit problems remain a major barrier to many families who want a home of their own. You should consider the following tips:
ESTABLISH A GOOD PAYMENT HISTORY. Pay all bills on time for at least one year.
LOWER YOUR DEBT LOAD. Lenders compare the amount of your debt to your income to determine the amount of money you can borrow. Excessive debt will reduce your buying power.
BUILD A SAVINGS ACCOUNT. There are a lot of up front cost associated with buying a home. A down payment of 3-5% or more is often requested besides closing costs.
CHECK YOUR CREDIT REPORT and verify its accuracy at least once a year.
CONSIDER TAKING A HOMEBUYER EDUCATION SEMINAR.
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